NBC Scrambles to Compensate Advertisers as Olympics Ratings Tank

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Ratings for the long-delayed 2020 Summer Olympics are coming in well shy of NBCUniversal’s original projections, a shortfall that has led the network’s ad sales team to begin issuing compensatory makegoods. The additional commercial units are being offered within the Tokyo Games themselves, a horde of spots that were reserved across the company’s linear TV and digital platforms.

While the deliveries are eclipsing just about every other pandemic-era sporting event this side of the National Football League, the gulf between what NBCU guaranteed its advertisers ahead of the Games and what they’ve managed to scare up thus far is formidable. Through the first four nights of competition, NBCU’s Olympics coverage has averaged 17.5 million viewers by way of the flagship broadcast network, its cable TV siblings and a clutch of streaming outlets. That marks a stark 43% drop compared to the 30.7 million viewers who tuned in during the analogous period of the 2016 Rio Games.

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The diminished ratings were prefigured by Friday night’s opening ceremony, which was staged from within the spectator-free confines of Tokyo’s National Stadium. The July 23 parade of nations aired live on NBC from 7 a.m. to 11 a.m. EST, and streamed in real-time on NBC’s online Olympics hub. An encore presentation of the event was broadcast at 7:30 p.m. EST and wrapped up at midnight New York time. When the impressions generated by the various NBCU platforms were tallied up, the opening ceremony averaged 17 million viewers, down 36% versus Rio’s 26.5 million.

NBC’s primetime coverage accounted for just shy of 12 million viewers. Through the first four nights of competition, the broadcaster is averaging 14.5 million viewers in prime, down 49% from the comparable period in 2016 (28.2 million).

The next two weeks will be an uphill climb for NBC, which is not only dealing with the 13-hour time difference between New York and Tokyo, the dispiriting atmosphere presented by so many rows of COVID-emptied seats and the ever-shrinking primetime TV audience, but now faces the loss of the United States’ most bankable athlete. After withdrawing from the women’s gymnastics team final on Tuesday, Simone Biles announced that she would sit out today’s individual all-around competition. Biles had been the odds-on favorite to repeat her 2016 gold-medal performance.

Biles has yet to decide if she will participate in next week’s individual events, after having qualified for all four.

Since Biles bowed out of the team final, the ratings have only become more worrisome. According to the total-audience data for Night 4—historically the most-watched of the 17-night event—NBCU on Tuesday night averaged 16.2 million viewers, which translates to a loss of nearly 20 million viewers versus the comparable broadcast from Rio. Meanwhile, NBC’s standalone primetime deliveries on were down to just under 14 million viewers, a drop of 58% from the 33.4 million fans who tuned in five years ago.

Media buyers said NBC has been quick to address its ratings deficit, and that the company has made advertisers whole by way of makegoods doled out on TV and in the digital space. One agency boss suggested the company has held off on selling any of its available scatter inventory as it works to help marketers hit their targets. Buyers who weighed in on the matter did not have a chance to review the final Night 4 numbers.

For its part, NBC said it is in no danger of running out of ADUs, industry argot for “Audience Deficiency Units.” In selling the always-on Games across multiple platforms, the company can offer makegoods via media spaces that even just a few years ago simply weren’t viable alternatives. These include YouTube, Twitter and Peacock, the latter of which didn’t exist when NBCU last hosted an Olympics in February 2018. In other words, they’ve got this covered, even if the traditional TV numbers have given rise to a sort of reflexive Chicken Little response from certain online circles.

“Just as athletes transformed the Olympics by continuing to push the boundaries of sport, our marketing partnerships have in turn evolved, reflecting how our audiences are watching the Games today,” said Mark Marshall, NBCU president of advertising and partnerships, in an email. “Enjoying the Games is not a linear sprint, but a multi-screen relay—and we know our platform will deliver for advertisers in delivery and impact. Our teams are speaking to our partners every single day to ensure we help them achieve their goals throughout the Games.”

In absolute terms, the Tokyo Games are still putting up relatively huge numbers, even if the overall turnout isn’t as robust as what NBC originally pitched its advertisers. For instance, Sunday night’s Olympics coverage averaged 19.8 million TV and streaming viewers, making it the most-watched sporting event since Super Bowl LV and the 18th biggest broadcast since the year began. Currently, the next-largest draw is ESPN’s presentation of the Sugar Bowl playoff matchup between Clemson and Ohio State, which averaged 19.2 million viewers on New Year’s Day.

Among the other recent sporting events NBCU has out-delivered include the NCAA Division I Men’s Basketball Final on CBS (16.9 million viewers), NBC’s broadcast of the race portion of the 147th Kentucky Derby (14.4 million) and Game 6 of the 2021 NBA Finals on ABC (12.5 million).

If the efforts to make Olympics advertisers whole suggests that NBCU won’t add to its pre-Games haul, the makegood push doesn’t necessarily mean that the money already on the books will start drying up. While there are still nearly two weeks to go before everyone can count the house, buyers said they’re under the impression that NBC has salted away enough units to keep its clients fulfilled. If the reserve units are all snapped up, the makegoods will have to come out of some other high-end NBC programming.

Back in 2016, buyers said that the heaviest investors in the Rio Games were granted units in Sunday Night Football as a courtesy, even after NBCU had made its clients whole within the event itself. At the moment, that sort of magnanimous gesture is not being discussed, and as an NBC rep characterized the situation, there is no danger of having to repeat that exercise this time around.

With more advertisers in the mix—more than 140 at last count, up from 100 in Rio—the individual brand investments are more decentralized, which means that it’s been less of an uphill climb to make each marketer whole. According to iSpot.tv estimates, the top-spending Olympics advertisers thus far are Toyota, Walmart, Chevrolet and Geico.

However things shake out on the makegoods front—that NBCU has had to resort to the measure is not at all unusual; after all, those units are held back for a reason—the company likely will not turn a profit. As Dan Lovinger, executive VP of ad sales for NBC Sports, told reporters a month ago at a gathering at Rockefeller Center, the Tokyo total should surpass the $1.25 billion in ad sales that had been booked before the Olympics went off the rails in March 2020. Per terms of the deal Comcast struck with the International Olympic Committee in 2011, the rights fee for the Tokyo Games is $1.42 billion.

NBCU walked away from Rio with a profit of some $250 million.

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